How To Lose Debt

One of the ways banks and credit card companies make money is through service fee income, which is an expense to you. This income can be in the form of account monthly service charges, yearly credit card fees, ATM transaction fees, travelers check fees, safe deposit box rental fees, overdraft fees, over-limit fees, cash withdrawal fees, checkbook order fees, etc. These companies are in business to make money, and that money is going to come from you, the consumer.

As a consumer, however, you have the right and responsibility to know about these fees and to shop around, if you will, to be sure that you have the best “rate” possible. So, for example, I wouldn’t recommend shopping around and looking for the best bank overdraft fees. You shouldn’t be bouncing checks in the first place.

On the other hand, if one bank offers free ATM transactions, depending on how many transactions you process on a monthly basis, these items could add up. Did you know that both banks in an ATM transaction potentially charge you an ATM fee? The bank where the account is drawn may charge them, and the bank that owns the ATM you are withdrawing from may also charge a fee. Is that ridiculous? Thank your congressmen. They chose to do nothing about it when the banks first began “double dipping.”

Some of these fees will be less for senior citizens, if you happen to be one of them, or less if you are a multiple-line customer of that particular institution. For example, you may get a reduced-rate safe deposit box if you also have a savings account. It’s worth asking, even if they do not volunteer this information readily.

We even have a credit union in town that will pay an interest rate on checking deposits of 4 percent. In today’s market that is unheard of, and the only catch is that you need to do 12 debit or credit card transactions per calendar month.

Quick note. Debit cards differ from credit cards in three significant ways. The first is that the transaction is immediately debited from the account tied to the card. No loan, no interest charges. That is a good thing.

The second way they differ is that you do not, as a consumer, get the same level of protection than if you had bought the same item with a credit card. Sad but true.

The third and potentially the most significant is that you are required to enter your pin number to complete the transaction. I don’t know about you, but I do not feel real comfortable entering my pin in every convenience store and gas station pump in the country. They are probably safe, but if the crooks are hitting ATM’s at banks all the time with card information skimming devices, what would make you think that these mom-and-pop places are more secure?

Getting back to bank and credit card fees, for most financial institutions, if you keep a certain balance in an account, they may waive the monthly service charge on an account. Find out what the minimum is, and determine if it is worthwhile having that much money sitting idle.

As far as checkbook orders, you have absolutely no requirement to buy the checks from the bank, where they get what is known as an up-charge on the checks that are printed. In other words, they make a profit, on top of the profit the check printing company made on the checkbook order. Isn’t that wonderful? You can’t make this stuff up!

Theory has it, that you could write a check on the top of a tablecloth and it could be used instead of a check. What was that, you say? Okay, I will admit, I never tried it. However, a check is simply a promissory note that says you will pay the person you are giving the check to a sum of money on a certain date. That’s it. So as long as it has, a payable to, a date, your signature, and the account and ABA (bank) number where the check is drawn, it has all of the components required to be presented for payment.

Now there is that little micro encoding, or electronically readable numbers, across the bottom of a printed check that will not be there, so your bank is not going to be too happy to accept a table cloth as in this case, but it is do-able.

Now I will say, if you get caught short and overdraw your checking account, assuming this is your first or second time, you can “negotiate” with the bank for return of the overdraft fee. If you are a habitual offender you can put this out of your mind, but if you made a mistake once or twice, they will likely be willing to waive it. You would need to call a branch representative, tell them how important you are for their business, and ask for your money back. It’s that easy.

Over-limit fees for credit card companies are harder to deal with. Credit card companies not only make a significant amount of money with fees like these, they also have other negative changes that take place when you go over limit or are late on a payment.

For example, many credit card companies have clauses that besides charging you a fee for going over limit, the interest rate on your entire outstanding balance may go significantly higher. While they may not be willing to negotiate the return of the over-limit fee, they may sometimes consider reducing the rate back down, if you show positive movement, like paying extra to reduce the balance below the credit line. Also, as far as credit card rates go, if you are a longstanding good customer of the company, they would even consider reducing the rate to match their competition.

For example, if you are a good paying customer of a credit card company who carries a balance all the time but make payments every month on time, they may be willing to reduce your rate, just to keep you as a customer. If you have another credit card with a lower rate, and you tell them you are going to pay off their card to move the money to the other lower rate card, they may be willing to match that rate you keep you as a paying customer. Especially if you are a good credit risk. It’s worth the call.

The key here is that any reduction in fees you can muster puts you that much closer to losing debt permanently, because you will have that much more money to pay down your remaining debt. You wouldn’t be dealing with high rates and over-limit fees if you have no debt. Now wouldn’t that be nice? It is not a dream, you will get there.